banner.visible = true buttons.visible = false banner.heading = banner.heading += Welcome! banner.subheading = We're really glad you're here. banner.subheading += banner.subheading += By the end of this you should understand how to think about investing using pictures. banner.subheading += banner.subheading += This should only take a couple of minutes. banner.nextButtonText = Next Page heading= subheading= notes= notes2= equityChart.visible = false pause fade banner.visible = false buttons.visible = true heading = Introducing investing in pictures subheading = Let's think about what an investment in the stock market looks like equityChart.showSeries = nodes equityChart.interactive = false equityChart.nodes = 0,0; 0.00001,0.00001 equityChart.visible = true pause notes = - Assume you have £100 invested in the stock market equityChart.labelPoints = -1 pause notes += - If stock markets rise 10%, it is worth £110 equityChart.nodes = 0,0; 0.1,0.1 equityChart.labelPoints = 0, -1 pause notes = - Assume you have £100 invested in the stock market notes += - If stock markets rise 20%, it is worth £120 equityChart.nodes = 0,0;0.2,0.2 pause notes = - Assume you have £100 invested in the stock market notes += - If stock markets fall 10%, it is worth £90 equityChart.nodes = -0.1,-0.1; 0,0; 0.2,0.2 pause notes = - Assume you have £100 invested in the stock market notes += - If stock markets fall 20%, it is worth £80 equityChart.nodes = -0.2,-0.2; 0,0; 0.2,0.2 pause notes = So these pictures show: pause notes += - Left and Right is the change in the stock market pause notes += - Up and Down is what your investment is worth pause notes = equityChart.showSeries = nodes,payoff,index notes2 = The picture shows that the stock market is represented by a straight, diagonal line notes2+= You make money if markets rise, but lose money if markets fall pause heading = Still awake? Let's get kinky. subheading = Turning straight lines into kinked lines notes = notes2 = pause notes += - What happens if you are scared of losing money and want a safety net? pause notes += - Let's imagine you don't want to lose any of your £100 if the stock market falls equityChart.labelPoints = 0, 1, 2 pause equityChart.nodes = -0.2,0; 0,0; 0.2,0.2 notes = notes2 = This is a kinked line. This is exactly what Options do notes2 += Options are investments that create kinked lines pause heading = You can't get something for nothing subheading = There is no such thing as a free lunch notes = notes2 = pause notes = - Let's start with the kinked line we created before equityChart.nodes = -0.2,0; 0,0; 0.2,0.2 pause notes += - This is a safety net: we are better off than an investment in the stock market pause notes += - The green area shows this benefit relative to the investment in the stock market equityChart.shadeDiffs = index pause notes = notes += - But you can't get something for nothing. This safety net will have a cost pause notes += - Let's look at how that line changes if the cost of this safety net is £5 pause notes = notes += - This moves the kinked line down by £5 to bring it into balance equityChart.nodes = -0.2,-0.05; 0,-0.05; 0.2,0.15 pause notes += - It creates a red area where you are worse off than the investment in the stock market pause notes = notes2 = And that is the essence of Options – creating kinked lines where you gain in one area by giving up in another pause notes= notes2= equityChart.shadeDiffs = equityChart.showSeries = nodes equityChart.nodes = 0,0;0.00001,0.00001 heading = Let's approach it from a different angle subheading = What do you get from money in a bank account? equityChart.interactive = false equityChart.visible = true pause notes = - Let's think about £100 in a bank account that pays 4% interest a year equityChart.labelPoints = pause notes += - The stock market moving up or down doesn't affect you pause notes += - If stock markets rise 10% over a year you earn £4 interest equityChart.nodes = 0,cash;0.1,cash equityChart.labelPoints = 0, 1 pause notes = notes = - Let's think about £100 in a bank account that pays 4% interest a year notes += - The stock market moving up or down doesn't affect you notes += - If stock markets fall 10% over a year you still earn that interest of £4 equityChart.nodes = -0.1,cash;0,cash; 0.1,cash equityChart.shadeDiffs = cash pause notes = notes2 = Money in a bank account is shown as a straight, flat line notes2 += This is the ultimate safety net notes2 += Different bank accounts will earn different amounts of interest. All this does is change the height of the straight, flat line equityChart.showSeries = nodes,payoff,cash pause subheading = Changing the flat line notes = notes2 = equityChart.showSeries = nodes,payoff, cash pause notes += - But what if you want to earn more than just the interest? pause notes += - The principles are exactly the same pause equityChart.labelPoints = 0, 1, 2 equityChart.nodes = -0.2,-0.1; -0.1,-0.1; 0,0; 0.1,0.1;0.2, 0.2;0.3,0.2 notes += - To earn more than interest in one area, you need to give up something in another area pause notes = notes += - In this example we create a green area where, if markets rise, you make more money than the interest you would receive from a bank account pause notes += - To balance this, we have lowered the safety net, creating a red area pause notes = notes2 = It's as simple as that! pause fade clear equityChart.visible = false heading = Summary pause notes2+= Investments can be thought of as pictures. Left to right is the change in the stock market over your chosen period. Up and down is the value of your investment pause notes2+= Stock market investments are a straight, diagonal line - you make money if markets rise and lose money if markets fall pause notes2+= Cash in a bank account is a straight, flat line - where you earn interest whatever the stock market does pause notes2+= Options can be thought of as kinked lines pause notes2+= As with any investment there is "No Free Lunch". This means investors must balance the benefits with costs pause clear equityChart.visible = false heading = Summary notes2+= The kinked line shows the outcome at the end of the time period and these trade-offs pause notes2+= The trade-offs can be shown against an investment in the stock market or against cash in a bank account pause notes2+= This means you can know in advance what the outcome will be with complete transparency. How much money you can make and when, as well as how money you can lose pause clear equityChart.visible = false heading = Doris in Action notes2+= Doris does all the heavy lifting notes2+= Doris allows you to set your safety net and look at all the kinked lines that are in balance notes2+= Thanks for your time notes2+= Enjoy Doris! pause fade @InsertDoc training-slides-disclaimer